Salesforce Beats Estimates: Can Its Good Run Continue?



Salesforce reported strong numbers

Salesforce.com (CRM) posted its fiscal 1Q18 numbers on May 18. It announced revenue of $2.39 billion—higher than analysts’ estimate of $2.35 billion. Its revenue rose 24.5% compared to the same quarter last year when it reported revenue of $1.92 billion.

It also beat EPS (earnings per share) estimates of $0.26 by posting EPS of $0.28. The company’s 1Q18 earnings are also higher compared to EPS of $0.24 in 1Q17.

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Salesforce also said that its earnings for the year would be better than previously expected. It expects to post fiscal EPS of $1.28–$1.30. The company also forecast fiscal 2018 revenue of as much as $10.3 billion. In the past seven years, the company has met or exceeded analysts’ expectations in every quarter.

Salesforce delivered double-digit growth in all four cloud verticals—app cloud, sales cloud, marketing cloud, and service cloud. The company also saw more than 20% revenue growth in each of its three main geographic areas.

As the above graph shows, Salesforce’s revenue has grown exponentially since fiscal 2009. Between fiscal 2009 and fiscal 2017, the company’s revenue has grown at a rate of almost 29% on a compound annual growth rate basis.

Salesforce faces stiff competition

Salesforce remains the leader in the CRM market with a market share of 19.7%. SAP (SAP) is next with 10.2% market share. Since Microsoft has taken over LinkedIn (LNKD), Salesforce might face stiffer competition in the CRM space. Also, it has ceded leadership to Microsoft (MSFT) in the SaaS (software-as-a-service) space.


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